Reference no: EM131299803

ABC Corporation acquired ZYX Company's net assets on March 1, 2016. ABC Corporation paid $158,000. The balance sheet and fair value information for ZYX Company immediately before the acquisition is shown below.

1) Prepare the acquisition journal entry for ABC Corporation.

2) Prepare the acquisition journal entry for ZYX Company.

3) Prepare the acquisition journal entry for ABC Corporation assuming it acquired all of ZYX's common stock for $158,000.

4) Assume that ABC Corporation incurred $25,000 in legal fees related to the acquisition. What is the journal entry to record these fees?

5) In your own words, explain some of the reasons ABC Corporation may have decided to acquire ZYX Company. (200 words or less)

					ZYX Company
Balance Sheet Data:					Book Value		Fair Value
Cash					30,000		30,000
Accounts Receivable					25,000		25,000
Inventory					25,000		40,000
Patents					35,000		45,000
Buildings and Equipment					215,000		95,000
Less: Accum. Depreciation					(150,000)
Total Assets					180,000		235,000
Accounts Payable					35,000		35,000
Notes Payable					100,000		100,000
Common Stock:
$10 par value					15,000
Additional Paid-In Capital					5,000
Retained Earnings					25,000
Total Liabilities and Equities					180,000